If you are going to pay your employees on a daily basis so that they can easily take care of their immediate expenses, you should think twice. Daily paychecks have long-term ramifications – besides, your employees really don’t want to get paid daily.
According to the latest survey from GOBankingRates, approximately 42% of employees don’t want to receive daily paychecks because doing so can create budgeting problems. Also, daily paychecks correlate to jobs with less pay and meager long-term savings.
Small businesses often struggle to hire top talent. So you, being a small business owner, should adopt a paycheck schedule that better suits your employees and make them happy.
How Many Employees Receive Daily Paychecks
Before you start to pay your employees daily, let’s find out how people receive pay for their work.
The survey finds that 10% of employees get funds in their accounts once per month, and 22% of employees receive their paychecks weekly. And the majority of workers (around 58%) get their paychecks weekly.
You will be surprised to know that a scanty number (only 4%) of employees earn daily paychecks.
As there is a tiny percentage of employees getting daily paychecks, small business owners should understand that employees don’t want to get paid daily.
Why Employees Don’t Want to Get Paid Daily
Though daily paychecks can take care of immediate financial needs, most Americans don’t favor it.
42% of employees, as found in the survey, wouldn’t go for getting paid daily even if the option for the same was given. Why? They thought getting daily paychecks would make it harder to budget their earnings.
17% of respondents said they would spend more money daily if they got daily paychecks. And 24% of employees wanted to see a bigger amount on their paychecks, that’s why they didn’t want to get daily paychecks.
Following is the age-wise and gender-wise breakup of why employees don’t want to get daily paychecks.
Being a small business owner, you can sometimes think that daily paychecks can help your employees better budget their paychecks.
However, the reality is different. Only 8% of survey respondents said that daily paychecks would help them budget their paychecks better and grow their savings faster.
The Difficulty of Budgeting With Daily Paychecks
People often pay expenses, such as car loans, utilities, and mortgage monthly. So if employees receive paychecks once or twice in a month, it will be easier to put aside money for these expenses.
However, with daily paychecks, employees need to make a small calculation daily to save the exact amount for these bills.
Rob Poindexter form Study and Surveys Team GOBankingRates, said, “With some employers around the country moving toward daily paychecks, we wanted to find out whether daily paychecks was something that Americans support and whether or not they thought it would benefit them. The results of the survey were eye-opening. The data shows that most Americans are not ready for the move to a daily paycheck yet,”
“Their spending and budgeting habits are still built around a weekly or biweekly paycheck and those habits have yet to evolve to the point where they could handle such a drastic change in their financial schedule. The majority of respondents believe they would struggle financially if they were paid daily,” he continued.
So giving daily paychecks thinking that it would solve the immediate financial needs of your employees can be one of the critical payroll mistakes. And you should avoid it.
Alternatively, you can consider giving advance to your employees if they land into any difficult financial situation.
About the Survey
GOBankingRates commissioned Survata, an independent research firm to conduct this online survey. It included 1,000 online participants and done between Sept. 20, 2019, and Oct. 1, 2019. There was no cash prize for respondents. You can access the survey here for more details.